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Press release from Business Wire

PetSmart Reports Results for the Fourth Quarter and Fiscal Year 2011

<p class='bwalignc'> <b>Q4 Earnings up 18% to $0.91 per Share; Comp Sales of 5.5%; Total Sales up 8%; Comp Transactions up 2.9%; FY11 Earnings up 27% to $2.55 per Share; Comp Sales of 5.4%; Total Sales up 7%; Comp Transactions up 2.5%</b> </p>

Wednesday, February 29, 2012

PetSmart Reports Results for the Fourth Quarter and Fiscal Year 201116:02 EST Wednesday, February 29, 2012 PHOENIX (Business Wire) -- PetSmart, Inc. (NASDAQ: PETM) today reported financial results for the fourth quarter and fiscal year 2011, and provided guidance for 2012. For the quarter, earnings per share were up 18% to $0.91. Comparable store sales, or sales in stores open at least a year, grew 5.5%, benefitting from comparable transactions growth of 2.9%. Total sales for the quarter were up 8% to $1.6 billion, partially impacted by $1 million in unfavorable foreign currency fluctuations. Services sales, which are included in total sales, grew 11% to $168 million. For the year, the company delivered earnings per share of $2.55, up 27% compared to $2.01 last year. Comparable store sales grew 5.4%, benefitting from comparable transactions growth of 2.5%. Total sales for the year were $6.1 billion, up 7%, including a favorable impact from foreign currency fluctuations of $11 million, and services sales grew 9% to $675 million. During the year, the company generated $575 million in operating cash flow and spent $121 million in capital expenditures. In addition, the company repurchased $337 million of PetSmart stock during 2011, with $101 million repurchased during the fourth quarter. The company also distributed $60 million in dividends during 2011, ending the year with $413 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility. “We are pleased to report another quarter of solid earnings growth,” said Bob Moran, Chairman and Chief Executive Officer. “2011 was a great year overall, with even more stories of innovation and differentiation in our stores.” “Based on our fiscal year calendar, 2012 will contain a 53rd week. For all of 2012, we anticipate comparable store sales growth in the 3% to 4% range, and total sales growth in the 7.5% to 8.5% range. We expect earnings per share between $3.02 to $3.16, and spending for capital expenditures projects to be between $130 million to $140 million. The impact of the extra week is estimated to be $120 million in sales and $0.16 in EPS,” said Chip Molloy, Executive Vice President and Chief Financial Officer. "For the first quarter of 2012, we are expecting comparable store sales growth in the low- to mid-single digits range, and earnings per share between $0.70 to $0.74.” Conference call information PetSmart management has scheduled a teleconference for 4:30 p.m. EST on February 29, 2012 to discuss results for the fourth quarter and fiscal year 2011. This teleconference will be webcast live for all investors at www.petm.com or www.streetevents.com. The webcast will be available until the company announces results for the first quarter of 2012. In addition, you can listen to the call live by dialing 866-244-4518 (within the United States and Canada) or 703-639-1170 (for international callers), code 1564015. A phone replay will be available through March 29, 2012, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1564015. About PetSmart PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 50,000 associates and operates more than 1,232 pet stores in the United States, Canada and Puerto Rico, over 192 in-store PetSmart® PetsHotel® dog and cat boarding facilities and is a leading online provider of pet supplies and pet care information (http://www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet grooming, pet boarding, PetSmart Doggie Day CampSM day care services and pet adoption services. Since 1994, PetSmart Charities, Inc., an independent 501(c)(3) non-profit animal welfare organization and the largest funder of animal welfare efforts in North America, has provided more than $165 million in grants and programs benefiting animal welfare organizations. Through its in-store pet adoption partnership with PetSmart Charities®, PetSmart has helped save the lives of nearly 5 million pets. Forward-looking statements This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2012 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Follow PetSmart on Twitter www.twitter.com/PetSmartTLC Find PetSmart on Facebook www.facebook.com/PetSmart PetSmart, Inc. and SubsidiariesConsolidated Balance Sheets (In thousands, except par value) (Unaudited)           January 29,January 30, 2012 2011   Assets Cash and cash equivalents $ 342,892 $ 291,949 Short-term investments 20,311 9,708 Restricted cash 70,189 61,439 Receivables, net 53,899 53,971 Merchandise inventories 644,864 615,841 Deferred income taxes 51,381 44,999 Prepaid expenses and other current assets   80,352     46,022     Total current assets 1,263,888 1,123,929   Property and equipment, net 1,067,028 1,132,435 Equity investment in Banfield 37,824 42,858 Deferred income taxes 93,485 96,215 Goodwill 44,084 44,111 Other noncurrent assets   37,775     30,672     Total assets $ 2,544,084   $ 2,470,220     Liabilities and Stockholders' Equity Accounts payable and bank overdraft $ 199,177 $ 168,776 Accrued payroll, bonus and employee benefits 158,079 139,359 Accrued occupancy expenses and deferred rents 68,584 64,328 Current maturities of capital lease obligations 54,219 45,277 Other current liabilities   201,247     156,065     Total current liabilities 681,306 573,805   Capital lease obligations 505,273 521,552 Deferred rents 81,403 86,027 Other noncurrent liabilities   122,273     118,194     Total liabilities   1,390,255     1,299,578     Stockholders' Equity: Preferred stock; $.0001 par value - - Common stock; $.0001 par value 16 16 Additional paid-in capital 1,312,996 1,222,340 Retained earnings 1,507,054 1,277,803 Accumulated other comprehensive income 5,490 5,380 Less: Treasury stock   (1,671,727 )   (1,334,897 )   Total stockholders' equity   1,153,829     1,170,642     Total liabilities and stockholders' equity $ 2,544,084   $ 2,470,220       PetSmart, Inc. and SubsidiariesConsolidated Statements of Operations (in thousands, except per share and store data) (Unaudited)                         Thirteen Weeks Ended Thirteen Weeks Ended Fifty-Two Weeks Ended Fifty-Two Weeks Ended January 29, 2012 % of Sales January 30, 2011 % of Sales January 29, 2012 % of Sales January 30, 2011 % of Sales   Merchandise sales $ 1,460,090 89.1 % $ 1,359,619 89.4 % $ 5,401,731 88.4 % $ 5,040,807 88.5 % Services sales 168,479 10.3 % 151,881 10.0 % 674,859 11.0 % 618,755 10.9 % Other revenue   9,259   0.6 %   8,534   0.6 %   36,714   0.6 %   34,235   0.6 %   Net sales   1,637,828   100.0 %   1,520,034   100.0 %   6,113,304   100.0 %   5,693,797   100.0 %   Cost of merchandise sales 1,006,779 61.5 % 934,763 61.5 % 3,783,951 61.9 % 3,554,387 62.4 % Cost of services sales 123,926 7.5 % 111,778 7.4 % 488,216 8.0 % 450,644 7.9 % Cost of other revenue   9,259   0.6 %   8,534   0.6 %   36,714   0.6 %   34,235   0.6 %   Total cost of sales   1,139,964   69.6 %     1,055,075   69.4 %   4,308,881   70.5 %     4,039,266   70.9 %   Gross profit 497,864 30.4 % 464,959 30.6 % 1,804,423 29.5 % 1,654,531 29.1 %   Operating, general and administrative expenses   327,900   20.0 %   315,139   20.7 %   1,301,304   21.3 %   1,225,803   21.5 %   Operating income 169,964 10.4 % 149,820 9.9 % 503,119 8.2 % 428,728 7.5 %   Interest expense, net   (14,102 ) -0.9 %   (14,615 ) -1.0 %   (56,842 ) -0.9 %   (58,837 ) -1.0 %   Income before income tax expense and equity in income from Banfield 155,862 9.5 % 135,205 8.9 % 446,277 7.3 % 369,891 6.5 %   Income tax expense (56,604 ) -3.5 % (49,096 ) -3.2 % (166,960 ) -2.7 % (140,396 ) -2.5 %   Equity in income from Banfield   2,742   0.2 %   4,167   0.3 %   10,926   0.2 %   10,372   0.2 %   Net income $ 102,000   6.2 % $ 90,276   5.9 % $ 290,243   4.7 % $ 239,867   4.2 %   Earnings per common share: Basic $ 0.92   $ 0.78   $ 2.59   $ 2.05   Diluted $ 0.91   $ 0.77   $ 2.55   $ 2.01     Weighted average shares outstanding: Basic 110,364 115,222 111,909 116,799 Diluted 112,100 117,712 113,993 119,405                                           Stores open at beginning of each period 1,210 1,172 1,187 1,149 Stores opened during each period 25 17 53 46 Stores closed during each period   (3 )   (2 )   (8 )   (8 ) Stores open at end of each period       1,232             1,187             1,232             1,187       PetSmart, Inc.Investor Relations, 623-587-2025